Musk criticized Trump's "big and beautiful" tax cut bill as disgusting, and opposition from the Republican Party continued

The One Big Beautiful Bill Act, which is being pushed by US President Trump, has been controversial recently. Many experts have criticized the bill for increasing the US debt burden in disguise. Even Elon Musk, who has always supported Trump, has blasted it: "This is a disgusting monster bill." Not only that, there are also differences within the Republican Party, and some lawmakers are worried that the bill will cause the national debt to surge and refuse to endorse it.

Key Summary

1. Musk called Trump's tax cut bill "disgusting" and criticized the cancellation of green energy subsidies for affecting energy independence and grid stability.

2. The Republican Party is divided, with some senators expressing strong opposition to debt and fiscal deficit issues.

3. Trump attacked dissenting voices and forced Congress to pass it as soon as possible.

Musk blasts "Big and Beautiful", a disaster for national finances

Musk, who has always supported Trump and was the former head of the Department of Government Efficiency (DOGE), criticized the "Big and Beautiful Act" on Twitter (X) on June 4, saying:

"I really can't stand this huge, outrageous, quid pro quo congressional spending bill, it's disgusting. Shame on those who voted for this bill, you know in your heart that this is wrong, but you still support it."

In addition to criticizing the overall budget size, Musk was also dissatisfied with the bill's plan to "cut off Biden's electric vehicle and green energy subsidies." He forwarded an official statement from Tesla Energy, pointing out that this would jeopardize the United States' energy independence and power grid stability.

Some Republican lawmakers support Musk, and Trump strongly attacks opposing voices

Some Republican senators also supported Musk's remarks. For example, Republican Senator Mike Lee of Utah forwarded the post and said :

"The Senate has the power to make this bill better, and it must do it now!"

Kentucky Senator Rand Paul said in an interview: "This bill will cause the national debt to explode. I cannot support it." He estimated that the bill would increase the debt deficit by $5 trillion.

After the news broke, Trump responded to Rand Paul on his own social network Truth Social:

"He loves to play devil's advocate, thinking his political maneuvers are smart and that big, beautiful bills are the best!"

The war of words also reflects deep rifts within the Republican Party over fiscal issues.

The Trump administration supports "Big and Beautiful", reducing taxes by 4 trillion but the deficit is still out of control

According to reports , despite the skepticism, the White House and the Treasury Department still unanimously support the "Big, Beautiful Act" which focuses on "tax reform" and "debt limit." White House spokesman Leavitt said: "President Trump has long known Musk's position, but this will not change his opinion."

Treasury Secretary Scott Bessent also expressed support after a meeting with Senate Majority Leader John Thune, who also said raising the debt ceiling was imperative and that failure was not an option. However, according to the U.S. Treasury Department's estimates, the United States will exhaust its debt authority as early as August or September this year.

The bill currently passed by the House of Representatives is estimated to reduce federal tax revenue by about $4 trillion over ten years. Even if social welfare spending such as health insurance subsidies and food stamps is cut, the deficit will still increase by about $2.5 trillion .

The bill's prospects are unclear, and the Senate votes are still stuck

There are currently 53 Republican senators in the Senate, and at least 51 votes are needed to pass a bill, but more than 16 senators have doubts about the content of the bill, including raising the debt limit, canceling subsidies, and expanding the deficit.

Some Republican senators have suggested that a "short-term, one-year" increase in the debt limit is acceptable, but it must be accompanied by large-scale spending cuts in exchange. The Senate is expected to continue negotiations in the coming weeks, and Trump will meet with the Senate Finance Committee as soon as possible, hoping to integrate opinions to pass the bill.

(Do you really think Trump's tax cut bill is effective? Silicon Valley tycoon Friedberg: Paying interest on national debt burns 2 trillion dollars every year )

U.S. Treasury Secretary Scott Bessent emphasized in an interview on June 3 this morning that the United States is not deliberately trying to escalate competition between the United States and China, but is taking measures to de-risk China's "withholding of raw material exports" and reorganizing the supply chain. In the face of continued concerns that tariffs will push up prices, Bessent pointed out that inflation data has dropped to the lowest level in four years, monthly wage growth is as high as 8%, energy prices have fallen by 20% year-on-year, and nearly 65% ​​of the tariff costs are absorbed by China itself, not all passed on to the American people. Regarding the upcoming 50% steel tariff, the debt ceiling bill and the fiscal deficit, he confidently shouted: "The United States will never default, and its finances will be stable before 2028."

Key Summary

• Bessant emphasized that "de-risking" is not about decoupling from China, and the goal is to make the United States and the global supply chain no longer overly dependent on China.

• U.S.-China trade talks have stalled, with Trump accusing China of violating the Geneva agreement.

• Rare earths and key raw materials are detained by China. Whether the United States will retaliate remains to be seen in the dialogue between Trump and Xi.

• With U.S. inflation data hitting a four-year low, Bessant declared that the policy was working.

• A new round of tariffs will take effect on June 4, raising steel tariffs to 50%, which may affect construction costs.

• The debt ceiling bill will be sent to the Senate, and Bensent confidently declared that "there will be no default."

Bensont denies intentionally deepening US-China confrontation, Trump and Xi are expected to have dialogue

The U.S. Secretary of Defense and several officials have recently warned that China's threats to Taiwan are increasing. Trump has even directly accused China of violating trade agreements, and the outside world has questioned whether the Trump administration is deliberately escalating U.S.-China competition.

In response, U.S. Treasury Secretary Benson said this was not intentional, because during the epidemic, China withheld the export of many key raw materials, causing the supply chain to stagnate. He emphasized:

“We are de-risking to restructure the supply chain.”

Regarding the fact that China has not yet released the rare earths and key minerals promised in the Geneva Agreement, Bessant said: "It may be a systemic problem, or it may be intentional." As for whether Trump and Xi will resume dialogue in the near future, Bessant said "there will be news soon."

JPMorgan Chase's Dimon said China is not afraid of the United States, and Bessant said China must face reality

Jamie Dimon, CEO of JPMorgan Chase, said at a forum this week that "China is not afraid of the United States, they have been prepared for this." Bessant retorted:

"I respect Dimon, but I disagree. No matter how well prepared China is, it still has to face the economic reality."

Will tariffs be passed on to people's livelihood consumption? Bensont said inflation has hit a four-year low and wages have grown by 8%.

The outside world is still worried about whether the tariffs will be passed on to people's livelihood consumption. Bessant said that the government established the "People's Livelihood Price Committee" as early as March to track inflation indicators, and the results are currently optimistic:

• Inflation hits 4-year low

• Salaries rose 8% last month

• Food prices fell, egg prices fell sharply

• Energy prices fell 20% year-on-year

Refuting the tariff shift to consumers, saying Chinese manufacturers eat 65% of the tariff costs

Bessant also cited a report from the South China Morning Post, pointing out that 65% of the tariffs were actually absorbed by Chinese suppliers, refuting the claim that American companies passed the costs on to consumers.

As for retailers like Walmart complaining that tariffs have reduced their gross margins to less than 3%, leaving them with little profit, Bessant said:

"Companies usually report the worst-case scenario to avoid being sued."

( Trump tells Wal-Mart to "swallow the tariffs!" and opposes passing the price increase on to consumers )

Will the doubling of steel tariffs affect the construction industry? Bessant practices Tai Chi: Helping the industry revive

Trump announced that starting from June 4, tariffs on steel and aluminum will be raised to 50%, which may have an impact on the construction industry.

But Bessant did not talk about the data, only emphasizing that this would greatly boost the U.S. steel industry. He also pointed out that he had just visited the Pittsburgh Steel Plant with Trump and the morale of the workers was greatly boosted.

Debt ceiling bill is about to enter the Senate, Bessant says there will be no default

Regarding the large-scale tax reform and debt limit increase bill currently being promoted by the U.S. Congress, the outside world is concerned about when the bill will be passed at the latest and whether there will be any problems?

Bessant emphasized:

"The United States will never default on its debts, and the government will never default on its bills. We are talking about and doing what needs to be talked about."

Refuting Dimon's debt collapse theory, Bessant: Slowly reduce the deficit and save money through tariffs and drug prices

Regarding JPMorgan Chase CEO Dimon's warning that the bond market could collapse, Bessant refuted: "He has predicted a collapse in the past, but it never happened." He added:

• Trump's drug price bill could save $1 trillion

• Tariff revenue could bring in an additional $2 trillion

• The administration's goal is to reduce the deficit and put the U.S. on a sound fiscal footing by 2028.

(Please reach an agreement with all countries on the 90-day tariff suspension! US Treasury Secretary Bessent: We have communicated with Walmart and there is no need to worry about Moody's credit rating )

Over the past 15 years, the American middle class has taken advantage of the skyrocketing asset prices, with real estate and stock market values ​​soaring, creating unprecedented wealth. However, this prosperity driven by low interest rates, government stimulus and global funds also hides a bubble crisis. When structural problems such as AI, deglobalization, aging and weakening consumer momentum emerge, the so-called "white lotus generation" will also become the protagonist of the next wave of "from rich to poor".

The illusion of the White Lotus Generation: consumption inflation actually comes from asset mispricing

@TraderNoah, a member of the Theia team of an asset management company focusing on real estate acquisitions, recently published an article titled " The White Lotus Generation: A Story from Rich to Poor ", in which he conducted an in-depth analysis of the U.S. asset bubble and social structural changes, emphasizing that the U.S. " asset boom " over the past 15 years was essentially a self-reinforcing cycle of asset prices and consumption habits that is now coming to an end.

The term "White Lotus Generation" comes from the TV series "The White Lotus", which refers to the high-net-worth class who spend their holidays luxuriously in tropical resorts. Most of them are white-collar workers with PR 90 to 99 in the United States, with considerable real estate and stock allocations. From 2009 to 2024, their total assets have expanded from US$8.7 trillion to US$32.1 trillion, with an average annual growth rate much higher than the previous 15 years.

This wave of prosperity has led white-collar workers to develop wrong consumption habits and a wrong sense of wealth:

Stock compensation becomes part of salary, and overly high asset valuations further push up corporate profits and consumer spending, forming a self-reinforcing cycle of asset prices and consumer behavior .

However, this illusion is built on a wave of loose monetary policy and passive investment, rather than solid fundamentals.

From free money printing to the consumer prisoner's dilemma: the storm of counterattack of asset bubbles

" If money can be printed infinitely and interest rates remain low, can asset prices rise forever? " This is the core question raised by the author. Over the past 15 years, the United States has used low interest rates and government stimulus to boost asset valuations, creating a seemingly stable economic boom:

Rising asset prices create book wealth and encourage consumption; companies incorporate stock compensation into their salary systems, further boosting demand and profits.

However, when the entire society is already "fully stocked with assets", marginal buyers can only come from two forces: "economic surplus or leveraged financing". But in the era of high interest rates, leverage cannot be sustained; and economic surplus is ultimately limited by real output. When new buyers are exhausted, leverage cannot be sustained, and fundamentals cannot keep up, this mechanism will eventually reverse:

At this point, any one person selling first will trigger a chain reaction. The asset has long lost its investment significance and has become a prisoner's dilemma.

(Note: The prisoner's dilemma is an important concept in game theory, which describes a situation in which individuals, when pursuing their own interests, lead the collective to a worse outcome.)

The advent of AI and the replacement of the middle class: high-paid white-collar workers are no longer the darlings of capital

In the past few years, white-collar workers have benefited from generative AI tools such as ChatGPT, and their productivity has been greatly improved, but this is only a transitional stage. As AI has shifted from an "enhancement tool" to a "replacement tool," companies have found that instead of hiring analysts with an annual salary of $150,000, it is better to import AI models for less than $2,000 a year:

For enterprises, this means a short-term increase in gross profit; for society, it means structural unemployment and consumption contraction among middle-class white-collar workers.

(Robinhood CEO: AI will make "one-person companies" the norm, and a wave of brand tokenization will emerge )

In the short term, AI is expected to increase corporate gross profit and stock price, but in the medium term, unemployment and income decline will hit consumer spending. At this time, the "white lotus class" with the most US assets will be the first to bear the brunt. Once they lose cash flow and become net sellers, it may trigger a market correction.

Examining the fragility of the US dollar: the retreat of US assets from a global perspective

Time Focus: Earlier this year, Noah personally observed in the Condesa district of Mexico City: “Americans are enjoying the arbitrage of food and cost of living here, and a large number of Silicon Valley engineers are moving overseas for the high salaries.”

This is an ongoing reversal of labor globalization, with Americans fleeing high prices but continuing to support their lives with high assets .

This situation comes from the global overvaluation of the US dollar and the pursuit of US assets. However, when global capital begins to question the US deficit and political uncertainty (such as Trump's return) as the US dollar depreciates, foreign buyers who used to buy US assets will withdraw, causing the risk of a chain collapse.

( The withdrawal of US dollar hegemony is a necessary part of the transformation of the US financial system: How do investors deal with the "post-dollar era"? )

The end arrives early: when the asset boom cycle will eventually reverse

Noah also predicted that in the next 15 years, the ratio of American household assets to income will fall from 800% to below 600%; the white-collar wage premium will also converge significantly:

When asset prices stop rising and spending power declines, the government's money printing can no longer save the quality of life of the middle class, but will only lead to currency dilution and capital transfer.

( Is the Fed powerless to save the situation? Ray Dalio reveals the risks behind the downgrade of US debt rating: "Inflation" is the real default )

He stressed that the real risk is not the financial crisis itself, but the psychological change: when the market and consumers generally realize that " this is not a temporary adjustment, but a structural recession ", the bubble will finally burst. And such a change may come faster than expected.